Kramer Roth & Rosenbaum, L. L. P., New York City (Jeffrey H. Roth of counsel), for petitioner.
Silberman & Rhine, L. L. P., New York City (Arthur Rhine of counsel), for William Norton, respondent.
Michael Shore and others, respondents pro se.
Loren Baily-Schiffman, J.
This holdover proceeding was tried before this court beginning on October 27, 2000 and ending on January 29, 2001. At
that time a schedule was set for posttrial submissions which were received simultaneously from petitioner and respondent on or about April 15, 2001.N o request for permission to submit further briefs was received from any party and the matter was fully submitted with the receipt of the posttrial submissions.
Petitioner seeks eviction of the respondent and undertenants after the expiration of respondent Norton's lease on September 30, 1999. Respondent Norton asserts defenses that he is a residential tenant entitled to Rent Stabilization Law protection on the basis that there are six or more residential units in the building; failure to comply with Multiple Dwelling Law § 325; failure to comply with RPAPL 741; estoppel; improper rent demand; and exercise of option to renew lease. Respondent has also counterclaimed for attorney's fees.
Findings of Fact
By a lease dated August 5, 1996, tenant William Norton rented the entire fourth floor of the premises, 111 North 11th Street, in the Williamsburg section of Brooklyn, from the then owner, Meyer Teitelbaum. The lease is commercial in form and states that the premises rented are to be used as artists' studios. A clause in the lease specifically prohibits living in the space. Despite this lease provision, tenant asserts, and the court finds, that the landlord rented the premises to tenant Norton with the knowledge and explicit consent that the premises were to be converted to several residential spaces. 
In fact, Mr. Norton immediately began the conversion of the fourth floor from raw space to residential use after signing the lease in August 1996. He began his residential occupancy of the space in 1996; however, the three other spaces that were created in the conversion were not used as residences until later. In October 1997, Norton received permission from Teitelbaum to install a shower and other fixtures in the space occupied by Doug Flamm. This work was done with the assistance of Teitelbaum's employee, Marcus Durantt. The two other spaces on the fourth floor were made usable for residential occupancy in 1998 with the addition of bathroom plumbing and
fixtures, gas lines for a stove and overhead blower for heat. This work was also done with the assistance of Marcus Durantt. The four spaces on the fourth floor were occupied as homes by the following people: William Norton; Doug Flamm, later replaced by Margaret Brown; Ann Sonderling, later replaced by Tara Smith; and Steve Weiss, later replaced by Sarah Oakes. 
The court finds that at the time petitioner purchased the building, there were four residential spaces occupied on the fourth floor. The court also finds that the residential occupancy of the fourth floor was open and not surreptitious. The conversion was accomplished with the assistance of the building employees; the building's elevator, operated by the landlord's employee, was used to transport the accouterments of residential occupancy, including a six-foot-long bathtub for Mr. Norton; the doors to the fourth floor spaces were often kept open exposing the residential nature of the spaces to the building's employees and visitors; and Mr. Norton had a number of conversations with the prior owner about the conversion to residential use, including where best to put the bedroom, the large bathtub Mr. Norton was so proud of and the " finished product" which included rooms on three levels. Mr. Teitelbaum saw the converted space when he visited the loft to examine the wall pointing done by his employees.
Tenant presented substantial testimony concerning other residential spaces in the building. James Sheppard testified that he and Dion Kliner signed a lease for the second floor of 111 North 11th Street in January 1997 similar in form to the lease signed by William Norton, i.e., a commercial lease with a specific prohibition on residential occupancy. Mr. Sheppard testified that he and Mr. Kliner had an understanding with the landlord that despite the form of the lease, conversion to residential occupancy would be permitted. In furtherance of this understanding, Sheppard and Kliner and Kliner's wife, Darcy Mann, began the conversion immediately after signing the lease. Three residential spaces were created by these tenants with the knowledge and consent of the owner and some assistance from Marcus Durantt. The conversion was completed in January 1998.
Mr. Sheppard testified that the petitioner was aware of the residential nature of the second floor prior to purchasing the building because prior to purchase, Anthony Fernicola, the principal of petitioner landlord, visited his space masquerading as a sprinkler inspector. During this visit, Mr. Sheppard first showed Mr. Fernicola the " middle space" occupied first by Sue Bannon and then by Joan Christian and Phillip Pond which was openly and unmistakably residential. Then Mr. Sheppard showed Mr. Fernicola his space, also openly and unmistakably residential, and then introduced Mr. Fernicola to Mr. Kliner at his door. Kliner testified that he showed Mr. Fernicola, the " sprinkler inspector," through his space which was also openly and obviously residential.
Several other meetings with Fernicola were described by Mr. Kliner, some of which took place in the loft space and one at the restaurant owned by Mr. Fernicola in Williamsburg, the Northside. The meetings in the loft took place at Mr. Kliner's dining room table, exposing the open kitchen-dining room area to view by Mr. Fernicola. Mr. Kliner also testified that Mr. Teitelbaum had visited the second floor loft space just after the lease was signed and at two points during the conversion. During the last visit, the kitchen, bedroom and bathroom in the rental space were completed and the other two spaces were under construction with walls up, bathrooms installed and gas and electric lines in.
Testimony was provided by Simon Obarzanek, pursuant to subpoena, concerning his residential occupancy of a space on the fifth floor from June 1998 to June 2000. The conversion of this space from commercial to residential was done by the tenant at the tenant's expense. Mr. Obarzanek vacated this space after making a deal with Mr. Fernicola that involved a payment to Mr. Obarzanek of $15,000.
Both Tara Smith and Margaret Brown testified that Mr. Fernicola visited and was shown around their spaces prior ...